GST (Goods and Services Tax)

Goods and Services Tax (GST) is India's unified, destination-based indirect tax on the supply of goods and services, implemented from 1 July 2017 under the 101st Constitutional Amendment. GST replaced 17 central and state taxes — Central Excise Duty, Service Tax, VAT, CST, Entry Tax, Octroi, Luxury Tax, and others — into a single tax with five core rate slabs (0%, 5%, 12%, 18%, 28%) plus a compensation cess on luxury and demerit goods (tobacco, automobiles, aerated drinks). It is the single most consequential tax-policy change in independent India.

The architecture has three components. CGST (Central GST) goes to the Union government; SGST (State GST) goes to the state where consumption occurs; on inter-state supplies, IGST (Integrated GST) is collected by the Centre and split with the consuming state. The effective combined rate on a domestic supply is CGST + SGST = total GST (e.g. 9% + 9% = 18% on most industrial machinery). The destination principle means that GST flows to the state of the buyer, not the seller, removing the cascading export tax that the pre-2017 regime carried.

For recycling plants, GST rates are uneven and politically charged. Plastic scrap (HSN 3915) is at 5%, while processed regranulate (HSN 3901-3914) is at 18% — a 13-point spread that funds the entire pre-shredding and washing value chain on input tax credit refunds. Rubber scrap (HSN 4004) and ferrous scrap (HSN 7204) are at 18%. Spent batteries (HSN 8548) are at 18%. EPR certificate sales under e-waste, plastic and battery rules attract 18% GST as "supply of services" under SAC 998540 ("environmental support services"). Compressed Biogas (CBG) sold to OMCs under the SATAT scheme attracts 5% GST under a 2021 notification.

The recurring trade-off for entrepreneurs is the inverted duty structure: when input GST (capex equipment 18%, electricity nil, scrap 5%) exceeds output GST (regranulate 18%, EPR certificates 18%, CBG 5%), the plant accumulates input tax credit faster than it can use it. For CBG plants especially — 5% output GST against 18% input GST on equipment — refunds under Section 54 of CGST Act are essential to working capital but take 6-18 months to process. Plastic and tyre recyclers face the opposite problem on scrap purchases from unregistered dealers — input tax credit is denied unless reverse charge applies, which compresses margins.